Determining the appropriate length of reasonable notice has always been more of an art than a precise calculation. The main objective of a notice period is to appropriately support an employee after termination as the employee searches for alternate employment. Since Bardal v. Globe & Mail Ltd. (1960, OSC) (“Bardal”), protecting the employee has been the main concern of the courts when determining what is owed to an employee upon a without cause termination of employment. Complex facts and unexpected circumstances have put a strain on this strategy. For instance, when difficult economic circumstances arise, should an employee receive extra financial coverage due to lack of equivalent employment opportunities? Or does equity play a role in protecting employers who are economically disadvantaged through no fault of their own? Falling oil prices and inconsistent case law make these questions extremely relevant in Alberta today.
Typically, economic conditions are correlated with the listed Bardal factors, adjusting the notice period with respect to “the availability of similar employment, having regard to the expertise, training and qualifications of the [employee].” When the economy is suffering, finding new employment is difficult and, therefore, a lengthened notice period is appropriate to protect the employee. However in the 1980’s, a few cases from Alberta and Ontario started to address the calculation of reasonable notice periods more broadly.
In the Ontario Court of Appeal decision, Bohemier v. Storwal International Inc. (1983, ONCA) (“Bohemier”), Justice Brookes, speaking for the Court, confirmed the lower court’s reasoning that economic conditions could be taken into account separately from their effect on alternative employment, to support both lengthening and reducing notice periods. Notably, the Court of Appeal stated that a faultless employer should be able to reduce its workforce effectively in times of economic hardship at a reasonable cost. The Court of Appeal also emphasized the importance of evaluating each case on its own merits. The Alberta Court of Appeal confirmed Bohemier soon after in Sarton v. Fluor Canada Ltd. (1986, ABCA) (“Sarton”). In interpreting Sarton, the lower court in Heinz v. Cana Construction Co. (1987, ABQB) stated that it is “unrealistic to force an employer to give the same notice period in a time of recession as he would in a time of prosperity.”
These cases appeared to be an anomaly, and over the next two decades reasonable notice periods during poor economic conditions were typically lengthened, given the emphasis on extended unemployment. Examples of this application are most prevalent in British Columbia. In 1987, Justice Lambert, speaking for the British Columbia Court of Appeal in Anderson v. Haakon Industries (Canada) Ltd., held that reasonable notice is an implied contractual duty of an employer and, therefore, “[a] set-back in the employers business does not give the employer the right to re-write the contract of employment.”
Ansari v. British Columbia Hydro and Power Authority (1986, BCSC) (“Ansari”), provided a more modern take on calculating notice periods and is frequently cited as the authority which sets out the most important factors to be considered when determining the notice period. Chief Justice McEachern, as he then was, stated that the logical focus of the calculation of reasonable notice, given the purpose of the notice period, should be on the employee’s ability to find subsequent employment. Ansari has since been interpreted to support the opinion that “although the economic factor must not be given undue emphasis, it [is] a factor to be considered in favour of the employee, but not in favor of the employer.” Ansari is frequently cited in British Columbia and while the weight may vary, economic factors have been applied to reasonable notice calculations in British Columbia for the benefit of the employee.
Recently two cases, again from Alberta and Ontario, revisited the alternative perspective that economic factors have the potential to reduce reasonable notice periods in certain circumstances. Justice Conlan, in the 2014 Ontario Court of Appeal decision of Gristey v. Emke Schaab Climatecare Inc. (“Gristey”), reduced the notice period that the Court would have otherwise awarded by one third, due to economic conditions. He agreed with the employer’s submission, based on Bohemier, that in determining a reasonable notice period, economic factors should be taken into account, including the market and financial health of the employer at the time of termination. Very recently, the Court of Queen’s Bench of Alberta decision in Lederhouse v. Vermilion Energy Inc. (2015) (“Lederhouse”) echoed these sentiments and confirmed, once again, that a depressed economy is a broad factor that can be considered by the Court. Justice Yamauchi took judicial notice of the falling price of oil, which was submitted by both parties as being a significant aspect of their arguments. The Court accepted that economic conditions are pertinent to employees and employers and, while not a determinative element, should be placed “into the matrix of factors [the Court] will consider.”
The broader consideration of economic conditions, applied in the most recent Alberta and Ontario cases, are helpful for employers. However, difficult economic conditions will not lead to an automatic reduction of notice periods. Both employers and employees must be aware that the economy is just one piece of a complex evaluation and each case will continue to be assessed on its own merits.